Why do some lenders allow brokers to offer even better rates than themselves?

Tobytobbins

My current 2 year fixed deal comes to an end in early December.
Using the link from the MSE email I see that Santander is offering an even better rate through a broker than they can offer themselves to me.
Why is that?
You'd think the lender would be offering the very best rate.

HappyHarry

Why do you think that? Many businesses sell their goods cheaper through a third party than they do when selling themselves. Not just mortgages - consider fund platforms and annuities in the finance world or cornflakes and baked beans in supermarkets.

Two key reasons would be that:
1. Running a client facing operation of any kind is expensive.
2. The third party offers a range of competing and non-competing products and the provider finds they sell more product via the third party.

ACG

Because we will vet the case to ensure it has a better chance of going through - saves them vetting it. 
We take the liability - if there is a mistake, we pay the cost. 
We do the admin - key the case on, check the documents and upload them. 

All of that costs them around 0.3% in commission where as if their staff were to do it they have to pay wages, pensions, sick pay, bonuses etc. 

Some lenders see a value in that, others dont. Horses for courses I suppose. 

kingstreet

Broker distribution is often cheaper and more efficient, as ACG suggests.

amnblog

Lenders can also have an issue about regulation on some products that carry product fees. If you need to choose between a product with no fee and a lower interest rate product with a fee, any help with that decision can be seen as regulated advice.

To provide regulated advice you need a qualified and regulated person which Lenders do not have in house in sufficient numbers - they are an expensive resource.

In some cases, as a result Lenders do not offer some products direct, only via a Broker (who is qualified and regulated to provide advice).

To be sure you are seeing the best options available, don't assume the Lender is providing them to you, and always consult an Independent Mortgage Broker.

Zerforax

The mortgage itself is the core product that Santander want to offer. The contact, process and everything else required for an individual to take on a mortgage is additional work, which is non-core (even if adjacent) to what the bank want to be doing.

Gentoo365

One reason could be to manage the offer to ensure that it is not oversubscribed.

With brokers, in theory, it's easier to manage the level of applications and to 'pull' a product quickly.

It's a lot harder to pull a product if the rates have been advertised or provided to retail customers. Someone could complain that they advertised a rate in branch or online etc but that rate was not available.

Hoenir

Gentoo365 said:

It's a lot harder to pull a product if the rates have been advertised or provided to retail customers. Someone could complain that they advertised a rate in branch or online etc but that rate was not available.

Tranches of funds have always been limited. First come first served. Mortgage books are built bottom down.